Bombardier Inc. is close to cinching an $870-million (U.S.) contract to sell 12 C Series commercial jets to an airline based in the Americas.
The airline, which was not disclosed by Bombardier because it requested anonymity, signed a letter of intent to acquire 12 of the smaller commercial jets that Bombardier is now developing, the CS100. The airline also expressed interest for 18 other jets in the C Series family. Should those options be exercised, the order would surpass the $2-billion (U.S.) mark at list price. However, airlines customarily never pay that price tag, as big orders come at a discounted price.
A letter of intent allows an airline to secure a production slot, but is still a step short of a firm and signed contract. It is nonetheless good news for Bombardier. The Montreal-based aircraft manufacturer has struggled to secure orders for its first commercial plane, which will compete head-on with the smaller Boeing and Airbus jets.
Bombardier had firm orders for 138 C Series airlines from nine carriers, as of Sept. 30.
Some airlines have reportedly been waiting to see if the C Series, which Bombardier is developing from scratch at a cost of $3.4-billion, will keep its promise of a 20-per-cent reduction in operating costs compared to existing planes. Bombardier president and CEO Pierre Beaudoin plans to update the progress on the C Series in the first quarter.
Working with a tight schedule and outside suppliers, Bombardier recently pushed back the maiden flight of the C Series by six months to next June. With heavy capital spending and negative free cash flow in its latest quarter, the aerospace division is cutting back costs.
This past fall, the division laid off close to 100 workers in its plants in Montreal, in Toronto, in Wichita, Kan., and in Belfast, Northern Ireland. Bombardier spokesperson Sylvie Gauthier couldn’t specify how many of these jobs were located in Canada. News of the unannounced layoffs broke in press reports Wednesday.
Ms. Gauthier pointed out that the aerospace division is still looking to fill 1,400 positions, half of which are located in Montreal, in engineering and in production.
In September, The Globe and Mail reported that Bombardier was putting the brakes on discretionary spending, cancelling off-site meetings, suspending training and even cutting all funding for Christmas parties.